Cal-Murphy LLC v. Hines Interests Limited Partnership CA1/5

CourtCalifornia Court of Appeal
DecidedAugust 1, 2014
DocketA137609
StatusUnpublished

This text of Cal-Murphy LLC v. Hines Interests Limited Partnership CA1/5 (Cal-Murphy LLC v. Hines Interests Limited Partnership CA1/5) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cal-Murphy LLC v. Hines Interests Limited Partnership CA1/5, (Cal. Ct. App. 2014).

Opinion

Filed 8/1/14 Cal-Murphy LLC v. Hines Interests Limited Partnership CA1/5 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FIVE

CAL-MURPHY LLC et al., Plaintiffs and Appellants, A137609 v. A139772 HINES INTERESTS LIMITED PARTNERSHIP et al., (San Francisco City and County Super. Ct. No. CGC08473750) Defendants and Respondents.

In these consolidated appeals, the nonprevailing plaintiffs challenge three orders awarding the prevailing defendants attorney fees and costs. We affirm two of the orders; we modify the third slightly and affirm it as modified.

FACTUAL BACKGROUND In 2004, a written contract (the Lease) was executed between National Office Partners Limited Partnership, assignor to respondent NOP 560 Mission LLC (NOP), and Murphy’s Deli Franchising, Inc. (Murphy’s Deli), leasing premises to Murphy’s Deli for the operation of a restaurant. Section 7.13 of the Lease addressed attorney fees in the event of a lawsuit: “If either party places the enforcement of this Lease, or any part thereof . . . in the hands of an attorney or collection agency, or files suit upon the same, or seeks a judicial declaration of rights hereunder, the prevailing party shall recover its reasonable attorneys’ fees, court costs and collection agency charges.”

1 Section 5.07 of the Lease addressed assignment or sublease of the Lease. It provided: “Any assignee shall assume in writing, for the express benefit of [NOP], all of the obligations of [Murphy’s Deli] under this Lease, provided that no such assumption shall be deemed a novation or other release of the prior Tenant.” The Lease further provided: “Any assignment or subletting that conflicts with the provisions hereof shall be void. No consent by Landlord to any subletting or assignment shall constitute a consent to any other assignment or subletting nor shall it constitute a waiver of any of the provisions of this Section 5.07 as they apply to any such future sublettings or assignments.” Murphy’s Deli subsequently subleased the leased premises to plaintiffs and appellants Najeeb Shihadeh, Mary Christina Shihadeh, and George Omran (the Individual Plaintiffs). Under the terms of the written sublease (the Sublease), the Individual Plaintiffs agreed “to comply with each and every covenant, condition and agreement contained in [the Lease] . . . to be observed and complied with by [Murphy’s Deli].” The Sublease further provided: “No further sublease or assignment of this Sublease shall be effective without written consent of [Murphy’s Deli].” According to the operative fifth amended complaint, the Individual Plaintiffs assigned the Sublease to plaintiff and appellant Cal-Murphy, LLC (Cal-Murphy).1 Cal- Murphy did not assume in writing the obligations of the Lease and Murphy’s Deli did not consent in writing to the assignment. However, Cal-Murphy operated a restaurant on the leased premises, paid rent, and was recognized by NOP as the sublessee of the Lease.

PROCEDURAL BACKGROUND In 2008, Cal-Murphy and the Individual Plaintiffs sued NOP and others on a number of contract and tort causes of action.2 All causes of action were brought on

1 Najeeb Shihadeh and George Omran are among the members of Cal-Murphy. 2 Details regarding the underlying dispute are not relevant to this appeal, but are set forth in Cal-Murphy, LLC v. MG Restaurants, Inc. (Apr. 30, 2014, A136198 & A136854) (nonpub. opn.).

2 behalf of all plaintiffs. The prayer for relief sought for all plaintiffs, “as their interests may appear,” various remedies including damages. The complaint was amended multiple times. Each iteration of the complaint alleged all causes of action on behalf of all plaintiffs, and prayed for relief for all plaintiffs “as their interests may appear.” On June 24, 2011, over the Individual Plaintiffs’ objection, the trial court granted NOP’s demurrer to the Individual Plaintiffs’ claims for lack of standing.3 The following year, Cal-Murphy’s claims were defeated and judgment in favor of NOP and another defendant and respondent, Hines Interests Limited Partnership (Hines), was entered.

A. COSTS NOP and Hines filed two memoranda of costs pursuant to Code of Civil Procedure section 1032, one seeking costs from Cal-Murphy and the other seeking costs incurred through June 24, 2011, from the Individual Plaintiffs. The Individual Plaintiffs moved to strike or tax these costs on the grounds that they were merely “spectators” to the litigation, only minimal litigation activity involved them specifically, and the defendants failed to mitigate their damages by delaying their demurrer to the Individual Plaintiffs’ claims. Among other arguments, the Individual Plaintiffs contended they were named only as part of the “chain of title” of the Lease. The trial court rejected the Individual Plaintiffs’ arguments and awarded NOP and Hines the full amount of costs sought. At the hearing, the trial court explained: “This chain of title argument . . . makes no sense, unless counsel for the [I]ndividual [P]laintiffs believed that for some reason the individuals belonged in the case to preserve the rights of others in the so-called chain of title, which would then render them appropriate parties for all of it, which would then obviate the argument that they were just bystanders. [¶] . . . [¶] In addition, if the rule were that a prevailing party has to justify its keeping parties in the case when it might have been able to knock them out, I don’t see how a court could enforce that. It would involve an explanation by the prevailing party as to why it did or

3 The Individual Plaintiffs unsuccessfully appealed that ruling, among others. (Cal-Murphy, LLC v. MG Restaurants, Inc., supra, A136198 & A136854.)

3 did not implement a strategy that it didn’t start, that is, the inclusion of individual parties. [¶] And I don’t see how I could delve into the thought processes of counsel in order to figure out when and whether demurrers should have been filed or other actions taken.”

B. ATTORNEY FEES NOP also moved for contract-based attorney fees pursuant to Civil Code section 1717 (section 1717) against Cal-Murphy and the Individual Plaintiffs, seeking from the Individual Plaintiffs only fees incurred through June 24, 2011. The Individual Plaintiffs opposed the motion on the same grounds as their challenge to NOP’s costs, as well as on the additional ground that they could not be liable for contract-based fees. After the first hearing, the trial court requested supplemental briefing on the issue of the Individual Plaintiffs’ liability for attorney fees, and a second hearing was held. The trial court awarded NOP fees against Cal-Murphy for nearly $2.5 million, a ruling not contested in this appeal. The trial court also issued a detailed decision finding the Individual Plaintiffs jointly and severally liable with Cal-Murphy for approximately $1.4 million of those fees—the amount incurred prior to June 24, 2011.4 After setting forth the factual and legal background, the trial court’s written order explained: “While the Individual Plaintiffs assert that NOP understood that they had no individual rights under the Lease, the operative documents arguably render them the franchisee-subtenant under the Lease. The Sublease so states, and there are arguments that the assignment of the Sublease by the Individual Plaintiffs to Cal-Murphy was neither approved as required by the Sublease, nor consummated by a writing.

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Cal-Murphy LLC v. Hines Interests Limited Partnership CA1/5, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cal-murphy-llc-v-hines-interests-limited-partnership-ca15-calctapp-2014.